Workers' compensation insurance covers the cost of work-related injuries. It's required for all California businesses that have employees.
Every state has different requirements for workers’ compensation insurance. In California, workers’ compensation is mandatory for all employers, even if the company only has one employee.
California law requires a business owner to carry workers’ comp insurance for employees who regularly work in California, even if the business is headquartered in another state.
Sole proprietors and independent contractors should strongly consider buying workers' comp even when it's not required. If you get injured on the job, this policy can help pay your medical expenses and provide part of the wages you lose while recovering.
Your personal health insurance provider might deny a claim if your injury is related to your work, which would leave you paying these bills on your own.
Roofers and others in a hazardous line of work may be required to carry workers’ comp, even if they don’t employ anyone else.
Whether or not you’re able to get workers’ compensation depends on the type of business and the ownership structure. Regardless, if you’re self-employed, it’s a good idea to check with the California Department of Industrial Relations to determine what your rights and liabilities are so that you can be sure that you’re properly insured.
How many hours an employee works does not affect their entitlement to workers’ compensation. It’s possible to get an independent contractor workers’ compensation waiver, but California law presumes anyone who works for an employer to be an employee.
If a claim is filed, the burden is on the employer to prove that someone is an independent contractor and not an employee.
There are three ways to buy a workers' comp policy in California:
Employers and employees are both protected by workers’ compensation settlements. California has created laws to streamline the process of making sure that an injured worker can quickly receive benefits, while the employer is protected from lengthy and expensive litigation and lost productivity.
Policies usually include employer's liability insurance, which can help cover legal expenses if an employee blames their employer for an injury. However, the exclusive remedy provision in most workers' comp policies prohibits an employee from suing their employer if they accept workers' comp benefits.
California law requires coverage to provide basic workers' compensation benefits for:
Often, the employer, employee, and workers’ comp insurer can reach an agreement without difficulty. However, the California DWC Information and Assistance Unit can help settle disputes and guide the parties through litigation if an issue cannot be resolved any other way.
The California Department of Industrial Relations regulates workers’ comp insurance. California employers and workers can find resources for all aspects of workers’ compensation claims and laws through the agency’s Division of Workers’ Compensation (DWC).
Failure to carry workers’ compensation insurance in California is a criminal offense. The penalties include:
If a worker is injured and the employer did not have workers’ comp, the employer could be liable for a penalty of $10,000 per employee at the time of injury if the case is compensable, or $2,000 per employee at the time of injury if that particular case was found to be non-compensable. The maximum penalty is $100,000.
Death benefits are an important component of workers’ compensation coverage in California. They provide:
Death benefits for dependents are determined by the number of dependents:
There are two types of workers’ comp settlements in California:
Stipulated findings and award. This is when the injured worker and the insurance company agree on the extent of disability and benefits, resulting in biweekly payments unless there’s a financial need for benefits to be paid upfront. The insurance company would continue to pay for future medical treatment. The injured worker might be able to reopen a case if the medical condition becomes worse within five years.
Compromise and release. An injured worker is paid a lump sum that closes the case. Any future medical care would not be covered, even if it is related to the injury.
Any settlement would need to be approved by a California workers’ comp judge. There’s often an informal hearing before the judge. Although the insurance company would handle this, it’s good for the employer to remain informed about the ongoing progress of settlement negotiations in case it becomes the subject of later litigation.
An injured employee has one year to file a workers’ compensation claim. California regulators can extend that time under certain circumstances:
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